Suppose a Firm in a Competitive Market Notices That Its

question 124

Multiple Choice

Suppose a firm in a competitive market notices that its marginal cost is greater than its price.This means that:

• A)there are opportunities to increase profit or reduce losses by increasing production
• B)there are opportunities to increase profit or reduce losses by decreasing production
• C)marginal cost must be falling
• D)the firm should increase its marketing budget

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Definitions:

Resource Shortages

A situation where the demand for resources exceeds the supply available within a given context or environment.

Changing Market Tastes

The evolution or shift in consumer preferences and desires, often influenced by cultural, social, or economic factors.

Bargaining Power

The capacity of one party to influence the agreement terms in negotiation scenarios due to their position or alternatives.

Attractive Industry

A sector of the economy that is appealing to investors and companies due to factors like high growth potential, profitability, and low barriers to entry.